TORONTO CONDOS | TORONTO VIP CONDOS | TORONTO PRECONSTRUCTION CONDOS | NEW TORONTO CONDOS | TORONTO CONDO | TORONTO LOFTS | CONDOS FOR SALE | TORONTO CONDOMINIUMS | TORONTO REAL ESTATE AGENT | TORONTO REAL ESTATE

What is a statement of adjustments?

The Statement of Adjustments often catches many homebuyers off guard. Put simply, the Statement of Adjustments sets out any items that need to be added or subtracted from the purchase price, and shows the total amount of money that the purchaser will have to pay to the builder on closing day. The items that will be adjusted on closing are set out in the Agreement of Purchase and Sale. These items may be negotiable with the builder BEFORE the Agreement of Purchase and Sale is signed. Very rarely is the purchase price set out in the Agreement of Purchase and Sale the same amount that will be transferred on closing, as there are a number of items that need to be adjusted for, including:

Deposit paid – A deposit on signing is standard practice in any real estate transaction, and can be a set amount ($500 used to be standard in St. John’s, but it is quickly increasing to $1,000) or a percentage of the purchase price. The purchaser gets to deduct this deposit off the purchase price, as it has already been paid.

New construction extras and credits – When the home being bought is a new construction, it’s very common to see changes made to the materials used or the allowances for things such as flooring, light fixtures, cabinets, and so on, or changes to the floor plan and construction methods. These are all adjusted at closing as extras or credits.

Taxes – Used residential housing isn’t generally subject to GST/HST in Canada, but new homes are. If the Agreement of Purchase and Sale doesn’t deal with this otherwise, the applicable tax will be added to the purchase price. However, it is quite common to see the agreed purchase price include all taxes, with the proviso that the purchaser assigns the GST/HST Rebate to the vendor. The details of how this rebate works are too boring to go into in this post.

Rebates – In some transactions, the Vendor will rebate money to the purchaser for problems that arise after the agreement is signed. For example, if the sale is subject to a home inspection and the inspection reveals an electrical panel that needs replacing, the vendor and purchaser may negotiate a rebate to reflect the cost of fixing this problem, rather than having the panel actually replaced. Similarly, if damage occurs as the Vendor is moving out, there may be a rebate for repairs.

Municipal taxes – In many cases, the homeowner has prepaid taxes to the end of the year or, in some cases, end of the month or quarter. The vendor is usually entitled to a credit for the portion of taxes that have been prepaid for the rest of the year. For example, if annual property taxes are $2,000 per year, and the house sale closes on October 1st, the vendor will get a credit of $500. The same goes for water taxes, if these are calculated separately and paid in advance.

Oil or fuel adjustments – If the home has oil heating or propane tanks, the purchase price will usually be adjusted to reflect the value of fuel remaining in the tank. The tanks will be measured on closing day (or sometimes the day before), and the vendor will get a credit for the amount of fuel that is left. For example, if an oil tank is half full (or half empty!) on closing day, and the value of half a tank of oil is $450, this would be credited to the vendor.

Rent and damage deposits – If the property is being used as a rental property and has tenants in place, the purchaser usually gets a prorated credit for the rent for the rest of the month. Similarly, if a damage deposit has been paid by the tenants, this whole amount gets transferred to the purchaser, as he or she will ultimately be responsible for returning in when the tenant eventually leaves. The physical deposit usually doesn’t change hands, it is just given as a credit towards the purchase price.

The Statement of Adjustments is generally prepared by vendor’s lawyer well in advance of closing and sent to the purchaser’s lawyer for review. There may be some finagling of the numbers and negotiation between the two sides, but generally it’s pretty straightforward.

The best advice is to review your Statement of Adjustments early and don’t be afraid to ask questions. And then ask them again!

Join Our Mailing List

*

*

*

* Required

Upcoming Condos

M City Plaza Midtown home (Power+Adelaide) Canvas Condos MAX Condos AYC Condos Cosmos Condos 3 Vita On The Lake Brownstone at Westown Phase 2 Unionville Glen Townhomes Sail Condominiums The Southwood By Streetcar Whitehaus Condominiums Sonic Condos York Condos Downtown Markham Daniels Waterfront Lighthouse Condos Briar Hill City Towns The Rosedale on Bloor Condos The Village Residences Pier 27 Condo 158 Front Condos On The Danforth Condos Modern Manors Townhomes Spice Urban Towns on Danforth Rd. Spring Valley Junction Homes Art Shoppe Loft + Condos The Bartholomew Condos Claridge Gate Upper Thornhill Townhomes Vida Condos Lindvest Brownstone Townhomes The Lighthouse Tower Condos Chelsea Maple Station Townhomes Park Avenue Place Condos Beacon Condos Design Haus Condos CityLights on Broadway The Ravine Condos Lotus Condominiums at Bayview Village Harmony Village Condos Soul Condos Minto West Side Condos Marquette Urban Towns The Colours of Emerald City Homes at Don Mills Patricia Homes At Bathurst & Steeles Omega On The Park The Ossington Town Homes Zigg Condos St.Clair West Riverside Square Lofts on Queen Enigma On the Park WQW Condos The Yorkdale Condominiums Vox Esta Gardens The Eglinton Islington Terrace 488 University Canary Park 11 Wellesley St Dundas Square Condos Totem Condos YC Condos Forward Condos Core Condos SQ Condos One Park Place South Tower Garrison Point Condos Aqualina Bayside 2221 Yonge Condos Monde Condos Park Towns Ny2 Condos Casa 3 Condos Harbour Plaza Condos 383 Sorauren Yonge-Rich Condos Musee Condos 155 Redpath Westlake Encore The Opus 365 Church Condos The Mark Condos King Blue Condos The College Epicurean High Park Residences Park Tower at IQ Vero Condos Ten York One Park Place Fashion District Condos Cinema Towers Diva Condos The Britt Residences 101 Erskine Condos Waterways Condo River City 3 460 Yonge 501 Yonge Condos 609 Sherbourne Condos eCondos Carnary District The Carnaby Lofts NIOR Condos SkyCity Condos 88 Scott Condos Eau Du Soleil Condos Tux Condos The Massey Tower Condos Sixty Colbourne Condos TAO Condos Flair Condos Xpression Condos Maestro Condos Grand Palace One Eleven The Brant Park Condos Edge Triangle Park Condos Nexus Condos